Farm insurance 101: Six things worth a second look before next renewal

If you’ve farmed for any length of time, you’ve probably had at least one moment where an insurance renewal slid across your desk, you signed it and then tucked it away without really reading it. That’s not a knock. Running a farm doesn’t leave much daylight for reading policy wording — but it’s also exactly how good farms end up with coverage that no longer fits what modern farming requires.

At The Insurance Market, an independent brokerage based in Ajax, Ont., we work with farm and commercial clients across the province, and the reason I am writing this column is simple. Most of the gaps we find in a new client’s farm policy are not because someone bought the wrong coverage; it’s because the policy was right 20 years ago, and the world has changed since then. Hands-off brokers and a decade of brokerage mergers have collided with an ever-changing farm landscape, and farmers’ insurance protection has paid the price.

This is the first in a series I will be writing over the summer. The goal is not to sell you anything. The goal is to give you a short, plain-English checklist of the things in a farm insurance policy that most often go sideways at claim time, so that you can pull out your declarations page, take ten minutes at the kitchen table to review it and decide whether you need to make a call to your broker before your next renewal.

1. Your current insured value is probably not up to date

This is the big one. Livestock, equipment and building values have increased sharply over the last two years, and most farm policies haven’t kept up.

For example, in Ontario, 500- 600-lb. steer calves averaged about $414/cwt in October 2024, and roughly $633/cwt in October 2025, a jump of about 53 per cent. D2 cull cows set a fresh record near $237/cwt this past March. If you priced your herd two renewals ago, your Schedule A limits, replacement-cost endorsements and mortality coverage may now reflect about half of what your animals are actually worth.

The same applies to used equipment. A 2018 combine that was worth $250,000 at renewal is now closer to $310,000–$340,000, depending on condition and hours used. If your policy is written on actual cash value (ACV) instead of replacement cost, the gap at claim time gets bigger every year you don’t update the schedule.

What to ask: When was my livestock and equipment schedule last re-valued?

2. Buildings: replacement cost, guaranteed replacement cost or stated amount?

Three different barns at three different farms can be insured three different ways, and producers often can’t tell which one they have without reading the declarations page.

Replacement cost rebuilds the structure with like kind and quality, up to the policy limit.

Guaranteed replacement cost rebuilds even if the cost exceeds the limit (subject to co-insurance compliance).

Stated amount/ACV pays out a fixed dollar figure, depreciated for age and wear.

The cost of lumber, steel and labour has climbed since 2022. A barn insured at “stated amount” five years ago can fall well short of what a real rebuild costs in 2026, especially after changes to National Construction Codes in January 2025. This is worth a careful look, especially on older buildings, where you assume you’ll “never rebuild anyway,” because most producers rebuild after a loss, not before.

What to ask: Which valuation method is on each of my buildings (replacement cost, guaranteed replacement cost or stated amount) and when was each limit last reviewed against today’s rebuild costs?

3. Barn fires and the electrical conversation nobody wants to have

Trillium Mutual’s 2024 annual report disclosed that eight of its top ten large losses in the previous year were structure fires. These are the kind of claims that drive the next renewal cycle for every farm mutual insurance business in the province.

The practical result is that mutuals are tightening up on three things: electrical inspections (especially on older wiring and on barns with retrofitted ventilation), hay and straw storage proximity to occupied livestock buildings, and deductibles on structures that do not have a recent inspection on file.

If your last electrical inspection was when the barn was built in 1998, it would be better to lead that conversation than to receive this information as a non-renewal letter.

What to ask: When was the last electrical inspection on each insured building, and does my carrier want anything specific in the next 12 months?

4. Liability that follows you off the farm

Farm comprehensive general liability is straightforward when the risk happens on your property. It gets complicated the minute you do any of the following:

• Custom work for a neighbour (e.g., custom combining, baling, manure hauling)
• Direct-to-consumer sales: freezer beef, eggs, lamb, farm-gate produce
• Agritourism: corn mazes, U-pick, weddings, on-farm dinners
• Hauling livestock or equipment for hire

Each of these can trigger exposures your base farm policy wasn’t priced for: product liability if someone gets sick from your freezer beef; professional liability if your custom work damages a neighbour’s crop; premises liability if a U-pick guest slips on a wet floor.

StatsCan figures show roughly one in seven Canadian farms now sell direct to consumers. A lot of producers have crossed into that direct-sell zone without re-papering (i.e., reviewing and altering coverage based on current operations) their insurance.

What to ask: Does my current liability wording cover X (list every side activity, no matter how small), and what’s the limit for product liability and recall response?

5. Equipment breakdown and business interruption: the quiet coverages

These two coverages are easy to skim past on a renewal because they don’t sound dramatic. They become dramatic during harvest.

Equipment breakdown covers internal mechanical or electrical failure on insured equipment, which is not the same as collision or fire coverage. If a grain dryer’s control board fries during the busiest week of harvest, equipment breakdown is what pays. Standard farm policies often have low sub-limits here or exclude breakdown entirely.

Business interruption (sometimes called “loss of income” or “extra expense”) pays when a covered loss puts part of your operation out of commission. Common scenarios: barn fire takes your milking parlour offline, equipment breakdown shuts off your dryer mid-harvest, or a storm damages a livestock barn and you have to truck animals to a custom feeder. Without business interruption coverage, the lost income and added cost come out of the operating line.

What to ask: If a covered loss took my main building or main piece of equipment out for 60 days at peak season, what would my equipment breakdown and business interruption coverage actually pay out?

6. Succession and policies that do not have the same beneficiaries

This is the one I have the hardest conversations about. It’s also the one most worth raising. The average Canadian farmer is 56 years old; the Ontario average is 57, and only about 12 per cent of farms have a written succession plan.

If something happened to you tomorrow, here’s what most farms discover the next morning:

• The farm property policy pays out to the named insured (often the operating entity).
• The life insurance policy pays out to a named individual beneficiary.
• The operating line is secured against assets. The bank has its own claim on those.
• The buy-sell agreement (if one exists) may name a different successor than the will.

Those four documents are written by four different professionals at four different times, and they rarely point in the same direction. A 30-minute review with your broker, accountant and lawyer in the same room saves your family from discovering the gaps the hard way.

What to ask: If I were not here next week, do my farm policy, life policy, operating line and buy-sell agreement all name the same successor and, if not, where are the gaps?

A short list to read at your kitchen table

Here are five questions to ask your current insurance broker before your next renewal:

• Are my buildings on replacement cost or stated amount?
• When was my equipment and livestock schedule last updated?
• What’s my product liability limit, and does it cover my side activities?
• Do I carry equipment breakdown and business interruption coverage, and at what limits?
• If something happened to me, do my insurance, will and operating agreement point in the same direction?

If any of the answers are “I am not sure,” that is not a problem; that is a starting point. Call your broker, send them this article and ask for thirty minutes of their time before the next renewal letter shows up.

If you would like a second opinion, you are welcome to call me directly. I work with farm clients across southern Ontario, and the first conversation is always free. The goal is not to move your policy. The goal is to make sure that whoever holds it understands what is sitting in your pasture and your barn in 2026, not 1996.

Note that while some of the information in this article is specific to Ontario, the general discussion of insurance policy items applies Canada-wide. Please check with your provincial farm insurance representative for clarification and further details.